Gammon Lake acquires producing property
Gammon Lake Resources Inc
GAML
Shares issued 8,054,879
1999-01-13 close $1.35
Thursday Jan 14 1999
Mr. Fred George reports
Gammon Lake has acquired an option to earn a 60 per cent interest in a joint
venture with Minera Fuerte Mayo S.A. de C.V. on a producing gold and silver
mineral property in Ocampo, in the southwestern area of the Chihuahua State in
Mexico. The property consists of 468 hectares centred on the Brenda mine. The
Brenda mine is currently producing gold and silver from epithermal veins.
Gammon Lake will become the operator of the property.
Smelter records indicate consistent grades that range four to six grams per tonne
gold and 100 to 150 grams per tonne silver. Production currently averages 17
tons per day and ore is concentrated through crushing and flotation facilities on
site. Extensive exploration work has been completed on the property by Behre
Dolbear De Mexico and Lewis Geosience Services Inc. To date, a diamond drill
program has not been undertaken on the property or the mine itself. Past work at
the site has, however, identified a number of prospective targets to be drilled
within the alteration zones.
The Ocampo gold-silver district has a history of small scale mining operations. The
area is part of the Sierra Madre Occidental and is dominated by Tertiary volcanic
and volcanoclastic rock broken down into upper and lower sequences. The lower
group consists primarily of porphyritic andesite and dacite with tuffs and
associated volcanoclastics. The upper unit is composed of rhyolite, ignimbrite and
associated volcanoclastic sediments interstratified with basalt flows.
Epithermal veins, associated with fault zones, that carry gold and silver
mineralization are within the lower volcanic unit in an area intersected by five
major faults. These veins and alteration zones have provided a number of
encouraging results as reported by independent consultants and the company's
own diligence at the site.
The information contained in the following tables summarizes results from
underground rock samples at Belvanaro, the main extension face of the Brenda
mine, and surface chip sampling of potential exploration areas, taken by
independent consultants for Minera Fuerte Mayo S.A. de C.V. and Gammon
Lake's senior geologist.
Underground and Surface Rock Sample Data
Brenda Mine, Belvanaro
Width Au g/t Ag g/t Au g/t
7.0m 2.6 51.0 3.52
31.6m 1.32 58.3 2.37
27.7m 2.5 75.5 3.86
2.8m 10.52 243.0 14.91
2.8m 12.38 907.0 28.79
Resurrection Zone
10.6m 3.36 48.5 4.23
San Martin Zone
1.54m 7.03 57.4 8.06
under-
ground
1.32m 4.90 103.9 6.78
surface
Las Animas Zone
22.5m 2.8 87.0 4.37
La Estrella Zone
24.0m 0.71 15.3 0.99
El Penol Zone
9.0m 5.2 18.6 5.54
Gammon Lake Due Diligence Chip Sampling
Brenda Mine, Belvanaro
1.2m 51.7 646.0 63.39
21.0m 0.9 39.1 1.61
Jesus Maria Zone
3.0m 4.11 31.9 4.68
3.0m 5.10 140.3 7.63
9.0m 1.32 67.3 2.54
Resurrection Zone
1.0m 4.5 1260.0 27.31
Los Aminas Zone
14.0m 1.22 44.4 2.02
Results shown under the company's due diligence chip sampling were assayed at
Chemex Labs using fire assay methods.
Gammon Lake will be investigating the potential for a high tonnage open pittable
mining operation. A wide area containing parallel zones of high grade material will
be investigated for lower grade material between the mineralized zones. Gammon
Lake is planning a sampling and diamond drill program in conjunction with its
independent consultants to determine reserves and delineate areas of bulk tonnage
potential. It is anticipated that the primary target will be the Jesus Maria zone.
Given the extent of alteration and silicification evident around these zones it is
hoped to intersect a large area of alteration. Drilling to depth will also be
considered to test zones below the historical working levels. Surface samples by
the company's geologist indicated the presence of additional mineralized zones
parallel to the high-grade zones currently being mined.
Gammon Lake will earn a 60 per cent interest in the property and form a joint
venture with the optionor by completing a $200,000 (U.S.) exploration program,
paying $3.23-million (U.S.) to the optionor and issuing a total of 2.5 million shares
to the optionor. These share issuances are subject to regulatory approval and, in
the alternative, may be satisfied by further cash payments equal to the value of the
shares based on a 20-day weighted average trading formula at the time the shares
are to be issued. The key terms of the option and joint venture agreement are as
follows:
Gammon Lake must complete an exploration and mine development program of
$200,000 (U.S.) on or before June 6, 1999;
In the option phase, Gammon Lake paid $50,000 (U.S.) to the optionor on
execution of the agreement, $30,000 (U.S.) is to be paid on Feb. 15, 1999 and
$170,000 (U.S.) is to be paid and the issuance of 500,000 shares is to be
completed on or before May 6, 1999. Throughout the option phase, 60 per cent
of the sales from production on the property may be applied to the cash payments
made to the optionor;
Upon completion of the option phase, which expires on June 6, 1999, Gammon
Lake will have a 60 per cent interest in the property and may elect to form a joint
venture with the optionor. The terms of the joint venture are as follows:
Gammon Lake is responsible to issue 2.0 million shares and pay the optionor
$3.0-million (U.S.) as follows:
A total of 500,000 shares and $500,000 (U.S.) six months after the joint venture
is entered into;
A total of $500,000 (U.S.) 12 months after the effective date of this agreement;
A total of 500,000 shares and $1-million on the 18 month anniversary of the
effective date of this agreement; and
One million shares and $1-million (U.S.) on the two year anniversary of the
effective date of this agreement;
Gammon Lake is the operator and 100 per cent of the sales from production on
the property may be applied to the cash payments due to the optionor in the joint
venture stage; and
If any party is diluted below a 10 per cent interest their interest is converted in to a
1.5 per cent net smelter return royalty. |
